How, then, do supermarkets make any profit? They only earn
pennies on nationally branded items, and the store-brand products
sell at even lower prices. Well, maybe those inconspicuous
shelf-mates bearing the stores logo and an appealing
price tag are not as humble as they look. On average, retailers
reap a profit margin 27 percent greater on these private-label
items than on national brands, according to a recent study
by the marketing research firm Datamonitor.

Private-label goods have been on store shelves since the
1860s when A&P introduced store-brand bulk commodity staples
like Our Own tea and Eight OClock coffee. But only recently
have store-brand products shaken their image as poor-quality,
generic items and extended into categories such
as health foods, gourmet items, baby food, and health and
beauty products. As a result, private-label sales accounted
for $48 billion of the roughly $315 billion U.S. food and
beverage market in 1999, marking a 23 percent increase from
1995.

What A&P discovered long ago is that private-label manufacturers
carry very low advertising and research and development costs,
so retailers face lower wholesale prices on these goods than
on national brands. The grocer can substantially mark up the
price of even premium store-brand cookies while
still keeping them cheaper than the barely marked-up Chips
Ahoy brand.

Professors Robert Barsky, Mark Bergen, Shantanu Dutta, and
Daniel Levy measured markups on nationally branded products
and private-label goods comparable in size, quality, and packaging
using supermarket scanner data from a Chicago-area supermarket
chain. By the authors calculations, Tylenol Tablets,
for instance, were priced an average of only 2 percent over
wholesale cost, while the store-brand equivalent was marked
up 30 percent. Surprisingly, the supermarket made the largest
gains on toothbrushes: While a shopper might have paid an
average of 14 percent over the wholesale price for a #5 Soft
Crest Tooth Brush, the lower-priced store-brand version was
available at 603 percent over its wholesale cost.

In addition to yielding high profit margins, private-label
goods also help differentiate competing grocery stores, since
private-label items are unique to each store. So dont
be ashamed to take advantage of those bargains; penny-pinchers
are more than welcome in supermarkets these days. - Leslie
Mann

Home tie$

A few decades ago, a worker leaving
his or her native country would likely be ignored by the home
countrys government or, in some cases, might even have
been frowned upon. These days, the money this worker sends
back home represents such a substantial inflow of capital
- up to almost 10 percent of GDP in some developing nations
- that receiving countries can hardly afford to be critical.
On the contrary, the governments of many countries go to great
lengths to show their gratitude. In the Philippines, for instance,
the first Sunday of Lent is celebrated as National Migrants
Day to honor Filipino men and women who are referred to as
modern day heroes, economic saviors,
and future saints of our dear Motherland.

Top Remittance
Receiving Countries in 1999.
Click on chart to enlarge.

Now, many countries actively try to encourage remittances
from migrant workers and to channel some of the money through
the domestic banking system. Some regulate the money transfer
firms, in an attempt to lower costs and ensure the safety of
transfers. Others, like Egypt, Turkey, and Poland, give preferential
exchange rates. And Sri Lanka, Bangladesh, and India offer dollar-denominated
accounts with higher interest rates.

Countries are also seeking to strengthen
economic ties with citizens who have permanently settled abroad
by adopting dual citizenship legislation. A study of 17 Latin
American countries by the Tomas Rivera Policy Institute found
that between 1996 and 2000 the number of countries that allowed
dual citizenship grew from four to 14. Similar laws are now
being considered by the Philippines, South Korea, and India,
and 15 African nations had dual citizenship laws in 2000.

In addition to benefiting from the
incentives to facilitate remittances, dual citizens are exempt
from restrictions on foreign investors in their countries
of origin. In Mexico, for instance, dual nationals can now
invest in such strategic industries as telecommunications
and petrochemicals, or can own property in coastal areas or
near the national border, privileges not ordinarily open to
foreigners. Mexican emigrants can also return home upon retirement
and take advantage of domestic health care and retirement
plans, should they choose to do so. Nonetheless, since 1998
only about 26,000 Mexican-Americans have reclaimed the Mexican
nationality they gave up when they became U.S. citizens.

While countries may have turned from
criticizing migrants to wooing them, some migrants are now
beginning to criticize their governments actions - feeling
empowered by their growing economic importance. Though the
governments may not always appreciate it, this meddling in
domestic matters could end up benefiting their countries in
the long run. - Oksana Nagayets